Income Distribution, Rentiers, and Their Role in a Capitalist Economy

Abstract:

The paper reviews some of the important developments since the financial crisis both on the issue of secular stagnation, as put forth by Lawrence Summers (2014a), and the rising share of profit as put forth by Thomas Piketty (2014), and it also seeks to tackle the issue of income distribution in a Keynes–Pasinetti perspective that offers important Keynesian analytics of the cyclical and long-term interaction between the rentier and the nonrentier sectors. This alternative Keynesian perspective on income distribution serves to shed light, both theoretically and empirically, on the specific evolution of this socioeconomic interaction, by analyzing time series over long historical periods for both the United States and Canada going back to before the Great Depression. It also seeks to better frame the well-known policy perspective on the euthanasia of the rentiers espoused by Keynes in the General Theory.

Keywords:

• secular stagnation
• functional distribution of income
• rentier sector
• Pasinetti index

ACKNOWLEDGMENTS

The authors benefited from the comments of various participants at the conference and they wish to thank, particularly, Orsola Costantini, Tom Ferguson, and Wesley Marshall for their special encouragement. They would also like to acknowledge the excellent technical assistance provided by Paul Beckta and financial support from INET relating to the project: “Central Banks, Crises and Income Distribution.”

Notes

Ironically the Pasinetti (1962) paper can be found on Piketty’s Web site. See http://piketty.pse.ens.fr/files/Pasinetti1962.pdf.

Additional information

Notes on contributors

Mario Seccareccia

Mario Seccareccia is a full professor of economics at the University of Ottawa, Ottawa, Ontario, Canada.

Marc Lavoie

Marc Lavoie is a full professor of economics at the same university and also at the University of Sorbonne Paris Cité, University of Paris 13 (CEPN). An earlier version of this article was first presented in the session “Macroeconomic Causes of Inequality” at the Institute for New Economic Thinking (INET) Conference Liberté, Égalité, Fragilité held at the Organization for Economic Cooperation and Development (OECD) in Paris on April 8–11, 2015.